SEC Probing Countrywide CEO Stock Sales
Sold at least $130.6 Million in
Company Stock in
First Half of Year Through Executive Sales Plans
DAN WILCHINS & RACHELLE YOUNGLAI / Reuters 17oct2007
NEW YORK - The Securities and Exchange Commission has opened an informal probe into stock sales by Countrywide Financial Corp (CFC.N) Chief Executive Angelo Mozilo, the Wall Street Journal [below] said on Wednesday.
Countrywide, the largest U.S. mortgage lender, is one of a dozen companies the SEC is looking into in connection with the subprime mess, the newspaper said citing people familiar with the matter.
A spokesperson for Countrywide said it does not comment on communications with regulators.
An SEC spokesman had no comment. But the agency has previously said it is looking "hard" at the general issue of whether executives are illegally trading on insider information and using a preset trading plan to avoid suspicion.
North Carolina Treasurer Richard Moore has raised questions about the timing of Mozilo's stock sales as problems in the subprime mortgage crisis surfaced.
Last week, Moore said he sent a letter to the SEC asking the agency to investigate Mozilo's use of stock options and the timing of changes made to his trading plans.
Countrywide plans to cut 10,000 to 12,000 jobs, or up to 20 percent of its work force and said earlier this month it expected a $125 million to $150 million pretax restructuring charge from the move.
Shares of Countrywide closed down 4 percent at $17.35 on the New York Stock Exchange.
SEC Investigating Mozilo Stock Sales
KARA SCANNELL and JAMES R. HAGERTY / Wall Street Journal 17oct2007
The Securities and Exchange Commission has opened an informal investigation into stock sales by Countrywide Financial Corp.'s chief executive officer, deepening problems at the nation's largest mortgage lender, according to people familiar with the matter.
Countrywide is one of a dozen companies the SEC is investigating in connection with the subprime fall-out. At least one area of inquiry, these people say, involve sales by founder and Chief Executive Officer Angelo Mozilo, who sold at least $130.6 million in company stock in the first half of the year through executive sales plans.
Countrywide isn't the only mortgage lender under investigation. New Century Financial Corp., a mortgage lender that filed for bankruptcy court protection earlier this year, is also the subject of a SEC and Justice Department investigation into accounting and stock-sales by senior executives also using executive sales plans.
These plans, known as "10b5-1" plans, have been employed by hundreds of executives to enable senior executives to sell shares at regular intervals. If executives pledge they don't have any insider information at the time the plans are established it can be used as a defense against insider-trading charges.
Earlier this year, the SEC said it is taking a hard look at these plans following an academic study that found that insiders were starting these plans just ahead of big stock drops. The findings suggest some plans may have been abused.
"We don't comment on communications with our regulators," said Rick Simon, a spokesman for Countrywide.
Walter Ricciardi, a deputy director of the SEC's enforcement division, declined to comment on Countrywide but has said the agency is looking at "accounting, disclosure and insider sales by all participants involved in pricing the securities, including company management, auditors, lawyers and credit rating agencies." The SEC formed a subprime working group in January and this summer SEC Chairman Christopher Cox said the agency had a dozen investigations involving packaged loan products tied to subprime mortgages.
Angelo R. Mozilo
Chairman and Chief Executive Officer Countrywide Financial Corporation
Angelo R. Mozilo is Chairman and Chief Executive Officer of Countrywide Financial Corporation, a company he co-founded in 1969 on the principle that every family in America desiring to achieve the dream of homeownership should have the opportunity to do so. Today, Countrywide is a global leader in residential finance and related services: a member of the S&P 500, Fortune 500 and Forbes Global 2000 with more than 900 offices operating on three continents. Mr. Mozilo is active in all aspects of Countrywide's businesses, which include mortgage banking, national banking, a securities broker-dealer, life and casualty insurance and real estate closing services. Mr. Mozilo was the 1991-1992 President of the Mortgage Bankers Association of America (MBA), which represents approximately 3,000 member firms involved in every aspect of mortgage and real estate finance. He is a board member of the National Housing Endowment, the charitable arm of the National Association of Homebuilders; the Joint Center for Housing Studies of Harvard University; Homes for Working Families; and the Horatio Alger Society. He is a Trustee of Gonzaga University in Spokane, Washington.
These are some of the awards received by Mr. Mozilo:
- National Association of Home Builders' Hall of Fame
- Boy Scouts of America James E. West Fellowship Award
- Ellis Island Medal of Honor, which is held by all living U.S. Presidents
- Albert Schweitzer Award for his work with the youth of America
- National Italian American Foundation's Special Achievement Award for Humanitarian Service
- Horatio Alger Association of Distinguished Americans Award